2015 Informs Annual Meeting

TB51

INFORMS Philadelphia – 2015

TB51 51-Room 106B, CC Procurement Mechanisms Sponsor: Manufacturing & Service Operations Management Sponsored Session Chair: Tharanga Rajapakshe, Assistant professor, University of Florida, W. University Ave, Gainesville, FL, 32611, United States of America, tharanga@ufl.edu 1 - Distressed Selling by Farmers: Model, Analysis, and Use in Policy-Making Shivam Gupta, PhD Candidate, UT Dallas, NJ School of Management, 800 W. Campbell Rd., Richardson, TX, 75080, United States of America, sxg104920@utdallas.edu, Ashutosh Sarkar, Ganesh Janakiraman, Milind Dawande The surprising practice of distressed selling, where farmers sell produce to outside agents at prices much lower than the government’s guaranteed price, is common in developing countries. We build a tractable stochastic DP model that captures the ground realities – limited and uncertain procurement capacity, high holding costs, and lack of affordable credit – that lead to distressed sales. Using real procurement data, we establish the accuracy of our model and develop useful policy suggestions. 2 - Coordinating Procurement Decisions in Multi-division Firms Central procurement organizations (CPO) of large firms must coordinate firm- wide procurement to leverage volume discounts from suppliers. Facing such a procurement coordination problem, we examine how a CPO can design internal prices to maximize firm-wide cost savings. Our analysis of commonly-used internal pricing rules shows interesting impacts on vendor selection, divisional participation, and gain allocation. 3 - Does Quality Knowledge Spillover at Shared Suppliers? – An Empirical Investigation Suresh Muthulingam, Assistant Professor Of Supply Chain Management, SMEAL College of Business, The Pennsylvania State University, 460 Business Building, State College, PA, 16802, United States of America, sxm84@psu.edu, Anupam Agrawal We study the spillover of quality knowledge across supply chains. We observe the quality performance of 191 suppliers who use the same facilities to manufacture similar products for two distinct businesses. We find that quality knowledge spills over under three conditions: (i) When quality efforts focus on organizational members; (ii) When quality efforts focus on output activities of suppliers; and (iii) When quality knowledge is developed at suppliers with low complexity. 4 - Contracting Between a Blood Bank and Hospitals Anand Paul, University of Florida, 351 Stuzin Hall, Gainesville, FL, United States of America, paulaa@ufl.edu, Tharanga Rajapakshe The supply of blood at a regional blood bank (RBB) is uncertain and often insufficient to satisfy the total demand for it. The RBB typically does not observe the demand at each hospital before determining the allocation policy. Inefficient allocation leads to shortages at hospitals which necessitates reallocation of blood and significant blood outdating cost. We make an analytical study of socially optimal contracting decisions of an RBB serving multiple hospitals. Fang Fang, Ph. D. Candidate, University of Miami, 5250 University Drive, Coral Gables, FL, 33124, United States of America, f.fang@umiami.edu, Hari Natarajan

2 - Automatic Feedback Control for Shunt Drainage in Hydrocephalus Patients Kalyan Raman, Professor, Northwestern University, Medill School, Evanston, IL, United States of America, kalyraman@gmail.com, Vijay Viswanathan

Excessive intracranial pressure (ICP) resulting from insufficient drainage of cerebrospinal fluid (CSF) leads to a neurological disorder called hydrocephalus, which is treated by implanting shunts to reduce ICP by draining excess CSF. We use non-linear control theory to develop a mathematical algorithm for a regulator to achieve shunt action that is significantly more sophisticated than that of a switch. 3 - Multiattribute Pricing Thomas Weber, Associate Professor, EPFL, CDM-ODY 3.01, Station 5, Lausanne, VD, 1015, Switzerland, thomas.weber@epfl.ch We provide a technique for constructing second-best multiattribute screening contracts in a general setting with one-dimensional types based on necessary optimality conditions. Our approach allows for type-dependent participation constraints and arbitrary risk profiles. As an example we discuss optimal insurance contracts. 4 - Dynamic Incentives in Sales Force Compensation We propose dynamic principal-agent model to investigate how to incentivize sales people when current selling efforts and carryover sales drive present sales. We show that the carryover effect increases not only expected sales, but also sales uncertainty. We then find that the manager incentivizes the high risk-aversion salesperson with a concave compensation and the low risk-aversion salesperson with a convex compensation. TB53 53-Room 107B, CC Behavioral Issues in the OM / Marketing Interface Sponsor: Behavioral Operations Management Sponsored Session Chair: Ozalp Ozer, The University of Texas at Dallas, 800 West Campbell Road, Richardson, TX, United States of America, oozer@utdallas.edu Co-Chair: Upender Subramanian, United States of America, upender@utdallas.edu 1 - Pricing Cause Marketing Products in the Presence of Social Comparison Paola Mallucci, Assistant Professor of Marketing, University of Wisconsin at Madison, 4261 Grainger Hall, 975 University Ave, Madison, WI, 53706, United States of America, pmallucci@bus.wisc.edu, Tony Haitao Cui, George John The broad takeaway from the literature on cause marketing campaigns, where firms donate to charities with purchase, is that they generally work well, because of ``warm glow’’. We conjecture that far from creating only positive feelings, such firm donations can create discomfort by encouraging social comparison. We find that firms can find it profitable to exploit such discomfort even if it decreases consumers utility. Results apply in both monopoly and competition. 2 - Pricing and Quality Perception: Theory and Experiment Karen Zheng, MIT, 77 Massachusetts Avenue, Cambridge, MA, 02139, United States of America, yanchong@mit.edu, Rim Hariss, Georgia Perakis, Wichinpong Sinchaisri We study how a constant pricing strategy versus a markdown strategy may induce different perceptions of quality among consumers, and how a firm should take these quality perceptions into account when optimizing its pricing policy for competitive products. We empirically elicit the relationship between consumers’ perceived quality and prices under either pricing strategy, and incorporate these relationships into our consumer model to analyze the firm’s optimal pricing policy. 3 - Conflict of Interest and Market Structure in Multiplayer Games Sung Ham, Assistant Professor of Marketing, George Washington University, 2201 G St. NW, Washington, DC, 20052, United States of America, sungham@gwu.edu, Jiabin Wu, Noah Lim When a firm serves customers who compete with one another, a conflict of interest may arise. We develop a multi-player game where firms serve competing customers, and examine how the market structure faced by the firms impacts the extent to which conflicts of interest affect behavior. We test our theory using an incentive-aligned experiment and find that the decisions are consistent with the model predictions. Olivier Rubel, UC Davis, Graduate School of Management, One Shields Avenue, Davis, CA, United States of America, orubel@ucdavis.edu, Ashutosh Prasad

TB52 52-Room 107A, CC Marketing and Optimal Control Sponsor: Marketing Science Sponsored Session

Chair: Olivier Rubel, UC Davis, Graduate School of Management, One Shields Avenue, Davis, United States of America, orubel@ucdavis.edu 1 - Optimal Learning to Select the Best Alternative Tony Ke, Assistant Professor, Marketing Department, MIT Sloan School of Management, 100 Main Street, E62-535, Cambridge, MA, 02142, United States of America, kete@mit.edu, Miguel Villas-boas A decision maker is deciding among several alternatives with uncertain payoffs and an outside option with known payoff. Before making a choice, he can purchase informative signals on each alternative. We solve for the decision maker’s optimal learning as well as stopping problem, and discuss the implications.

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